The Department of Justice slammed Apple, MacMillan and Penguin in their efforts to fight the anti-trust case.
Earlier this year. Simon & Schuster, Hachette and HarperCollins settled the suit.
B&N just announced that their NOOK results were disappointing.
Sony, Kobo, Google – all after a few years of trying, still have less than 1% market share each.
But, Amazon continues to roll along.
What the DOJ suit basically does is allow the retailer to set the consumer price of an eBook. The DOJ claims that Apple worked with five corporate publishers to establish a fixed set of prices. These prices were then the only level at which all retailers could sell their eBooks. The DOJ eliminates this and allows the retailer to price eBooks anywhere.
What will happen is Amazon will start to sell eBooks below cost.
This will push an already fragile MS-BN NOOK over the cliff. When Amazon lowers the price of eBooks, B&N will either match the prices and lose money or keep their prices $2-$3 higher than Amazon, and lose market share. Either way, MS-BN future looks bleak.
It won’t matter to Apple. They have 10% of the market and have not been aggressive. They care more about selling iPads anyway and digital textbooks. Apple will continue to maintain a 10% market-share just because there are so many iPads in the marketplace. Some people prefer all Apple, all the time.
So, what will happen from the DOJ settlement? Amazon’s share (which had fallen to mid-60% from over 90% four years ago), will rise again. My estimate is it will be in the mid-80% range.
Amazon is the winner. The DOJ suit effectively is a death sentence for B&N.
But then, that is the free market – I guess.
But, having said that Amazon has won, does not mean the match is over. There will always be competition from somewhere.
The competition will come from niche players – specialty stores. Those that can create a better experience in a specific subject can out-sell Amazon, Don’t take the giant on head-on. Amazon will always fight to maintain biggest selection, the most efficient customer service and the lowest prices. But they can not be the experts in every subject. Develop the verticals, build it and the customers will come.
It can be done. It will be done.
More next time.